Newspapers Guide to TV Magazines

Transcription

1 Newspapers Guide to TV Magazines

2 Executive Summary A combination of new technologies, a radically changing television market, an unprecedented shift in age population composition, and a focus on subscriber retention have created renewed interest in television magazines among newspapers. Newspapers Guide to TV Magazines provides details about the makeup of the niche audience for TV supplements, the demand for the products, and the ways in which newspapers address the market need, along with the impact of different business models on business operations and P&L. The guide also suggests ways to evaluate different business models in order to balance risks with opportunities and makes recommendations based on risk tolerances and newspapers business objectives.

3 Introduction Television is in the midst of digital disruption similar to that experienced by the newspaper industry. Just as technology has given consumers more and quicker access to news, consumers now also have access to more TV programming than ever. The full 2017 lineup included 1,500 new TV programs, more than 500 of which were consumers: it satisfies broader interests and tastes, promotes competition, and This scenario is bringing some consumers back to a printed television guide, which improves programming quality. But this plethora of programming and access they find to be a simpler, quicker and easier way to find programming of interest. It s also options also has vexed many consumers, why newspapers have a renewed interest in including longtime newspaper subscribers print TV products as they can fulfill the need who are looking for trusted TV-viewing of this niche audience. just 87 new scripted cable series in guidance in an easy-to-use and familiar format. And just as mobile technology literally has The same digital fatigue that is drawing put breaking news from a growing some people back to newspapers is number of sources into the hands of equally as prevalent among a niche audience of TV viewers. For this niche, the scripted shows. In comparison, there were consumers, so too is the case with audience watching television notion of ending the day by relaxing in front of the TV has been replaced with a entertainment on smartphones and need to learn new, complex and often tablets from a variety of new delivery unintuitive navigational systems simply to find something good to watch. People television entertainment with a growing platforms. The tsunami of change in the TV industry has created many benefits for who fall into this niche have had enough dishes, cable outlets, clumsy search menus and apps. They simply want to be entertained.

4 About TV Magazines For decades, many Americans relied on newspapers weekly TV listings inserts to learn about and schedule their viewing activities. But a perfect storm of digital disruption and the global financial crisis decimated newspaper circulation from and the industry was forced to make draconian cost cuts. One cost-cut consideration was the TV listings insert. Similar in some respects to stock market listings, the TV insert provided a valuable service but to a shrinking segment of newspaper readers. The question newspaper executives faced was how to continue to serve niche subscriber interests in a financially prudent manner. To appease TV enthusiasts, newspapers adopted several approaches, from continuing full run of the insert and trying to offset costs with more advertising, to opt-in delivery, to the callous kill-the-tvbook decision. In the midst of the downturn, a new business model for TV magazines was born to satisfy the need. The model cut costs and created new revenue for newspapers while serving subscribers with a superior product. 85 localized editions nationwide Today s top TV magazine for newspapers has been rolled out in more than 200 markets across the U.S. since It combines a glossy cover, celebrity interviews, tune-in recommendations, movies, sports and soaps, with daily listings that are localized to each of these U.S. markets.

5 Know Your Niche The TV Magazine Market In a 2008 presentation, Martha Stone, then director of the Shaping the Future of the Newspaper Project for WAN-IFRA, noted the growth in magazines and newspaper supplements, the growth in niche audience publications based on age, ethnicity and gender, and growth in lite newspapers with one-topic covers. Stone s assessment in 2008 is consistent with the environment today in relation to TV supplements. The audience for TV supplements is a niche, consisting primarily of Baby Boomers. They: watch more TV than any other age group, averaging 174 hours per month are avid readers of newspapers, travel and home-related magazines skew slightly higher toward women account for 70 percent of the country s disposable income reference their TV magazine, on average, more than two times each day For this audience, a printed, television-focused supplement is an extremely important component of their newspaper subscription and they can be very vocal when the service is stopped or altered. Larry Riley, while vice president of circulation at the Orange County Register, put it kindly when he said, The TV book is a sought-after product in a mature segment that s a passionate minority. Indeed they are. Both the Minneapolis Star Tribune and Chicago Sun-Times learned how vocal and vociferous this niche audience can be when each lost significant numbers of subscribers after they killed their TV books.

6 The size of the Boomer demographic is large and growing at an unprecedented rate. Boomers watch the most TV and read more print publications than any other age demographic. Throughout history and around the world, populations and societies charted by age always have been represented as a pyramid, with a largest segment of the population made up of young people and declining numbers of people tapering up toward the top of the age population. Yet for the first time, the U.S. population is shaped more like a rectangle, with the number of people aged equaling the number of those years old. This shift in age population composition has fostered interest in providing TV supplements to newspaper subscribers for two reasons: 1. because according to Nielsen, 9 out 10 Boomers watched television yesterday : and 2. because Boomers consume print at a voracious rate 91 percent of U.S. adults read magazines, according to the Association of Magazine Media. The Los Angeles Times November 2014 special report called The New TV: How Everything is Changing confirms heavy TV viewing by Boomers. In it, the paper provided several infographics, one of which showed the top nine multimedia devices used in the U.S. by age and purpose. Traditional television is still the most widely used multimedia device, and as depicted in the graphic to the right, its dominant audience is Boomers. Even though a significant amount of data points toward a growing Boomer audience interested in printed information and guidance around what to watch on TV, the fact is that the audience for printed TV supplements is a fraction of the overall newspaper subscriber population. NTVB Media, which has launched TV Weekly in partnership with more than 200 U.S. newspapers has consistently seen the buy-in rate for its magazine at between 5- to 14-precent.

7 Surging Interest in TV Supplements & The Importance of Schedules As noted previously, there is growing interest among newspapers to provide their readers with TV supplements. The interest is born from publishers desires to serve subscribers, maintain and grow circulation, and to increase revenue. Moreover, consumers and television industry executives say that schedules, often called TV grids or listings that make up the majority of TV supplements, remain a much-needed tool for networks and viewers. The 2014 Los Angeles Times report stated that, Research indicates that a majority of the TV audience depends on the schedules to make viewing choices. Meanwhile, network executives still rely on it for marketing and programming strategies. Added Kim Lemon, executive vice president of research, program planning and scheduling, and research for Showtime Networks: You'd have to have your head in the sand not to acknowledge that people are definitely taking more control of how they watch television. But personally, I still believe in the schedule. " We're still a good distance away from the schedule not being particularly relevant," said David Poltrack, chief research officer for CBS Corp.

8 The Big Picture TV Supplements in a Newspaper Context Newspapers always have operated in a co-dependent, two-sided market, deriving revenue from both advertisers and subscribers. From the mid-1980s until 2008, advertising revenue far outpaced circulation as the chief revenue driver for newspapers. But two-sided markets exhibit demand economies of scale, and when newspaper circulation dropped sharply in 2008, so did advertising revenue. The downturn led to dramatic cost-cutting among newspapers from , and many supplements along with more mainstream news were chopped. The result as everyone involved knows is that the industry and the newspaper products themselves have been thinned out. Today however, the newspaper industry is stabilizing and publishers are looking to preserve circulation, deliver more value to readers, and generate additional revenue from their most loyal subscribers. One area that many newspapers are considering to provide additional value to readers, and to increase revenue, is with TV supplements. This trend is due to the growing number of Boomers, their propensity to watch more television, their frustration with sometimes difficult- to-use TV technology, along with significantly increased programming choices now available. an increasing number of newspapers are delivering magazines and other products such as catalogs to generate additional revenue and enhance the profitability of their routes. NAA s 2015 Facts, Figures & Logic The use of TV supplements has grown along with other publications and products delivered by newspapers and as indicated in the chart below from the NAA s 2015 Facts, Figures & Logic study.

9 Business Models, Operational and P&L Impact Newspapers have a variety of business models available to them to meet the needs of their subscribers who are interested in TV guidance. The most common ways in which newspapers address this market need follow.

10 1 Continue full-run, weekly TV supplement with cost offset by ad revenue 2 Kill current TV book 3 Free-to-reader opt-in model This model is used by newspapers that feel they have enough potential advertising demand to offset costs. Operational impact Continuing to create a full-run, weekly TV supplement internally has significant impact on newspaper operations. The effort will require resources from nearly every facet of the organization including editorial, circulation, design, production/ printing, and accounting. P&L impact In rare cases, newspapers have experienced a positive P&L when continuing a full-run TV supplement on their own. In those instances, the market has an advertising sales team with time and resources to focus on selling ads in the supplement. For most newspapers, however, there is no P&L improvement for maintaining their own TV supplement as advertising does not offset costs; and because of market size, circulation retention and potential growth also do not offset costs. Most markets see 88 to 92 percent waste in providing full-run TV supplements to their subscribers. Killing a TV supplement entirely is a draconian action. As described previously, both the Minneapolis Star Tribune and Chicago Sun-Times lost significant numbers of subscribers each when they killed their TV supplements, and there are smart alternatives for newspapers to consider that will not upset subscribers and, in fact, delight them. Operational impact Killing a TV supplement will cut costs associated with its production. However, it will not immediately reduce all operational impact. The effects of killing a TV supplement will be realized mainly in call centers from disgruntled subscribers, and in circulation and marketing departments that will work to maintain or win back subscribers. P&L impact The P&L impact will be felt on both the cost and revenue sides. Costs certainly will be reduced when the supplement is killed. So too will revenue, as some subscribers will drop the newspaper entirely. In addition, there will be short-term costs associated with customer service, retention and winback activities related to the cut. The free-to-reader opt-in business model has a relatively high acceptance rate of percent. This results in modest cost savings from the full-run model, but it requires the additional effort and cost of selective delivery. Operational impact The free-to-reader opt-in model creates the most operational impact on a newspaper organization. Not only must the paper apply resources from editorial, design, production/printing and accounting, but it adds additional responsibilities to circulation, which must manage selective delivery to subscribers, and to service call centers for issues management. P&L impact With high operational impact, the free-toreader opt-in model does not provide significant savings from a full-run model; and because of lower circulation, it doesn t offer a solid opportunity to offset costs with advertising. Potential cost savings through free-to-reader opt-in may seem attractive initially, but high operational costs coupled with limited revenue opportunities make this model unattractive.

11 4 Do-It-Yourself DIY pay model The DIY pay model requires a newspaper to charge a subscriber for something that was previously included in the newspaper package. It is also another charge on a subscriber s newspaper bill, layering onto newspaper rate increases. Operational impact DIY keeps newspapers in the TV supplement business and will impact nearly every aspect of the organization, from editorial to production/printing, circulation, subscriber services, advertising, marketing, sales and accounting. HIGHLIGHT: The DIY pay model requires newspapers to add another charge to ever-increasing bills. P&L impact The P&L for a DIY is very attractive, but it comes at a high risk due to increasing the total cost of the yearly newspaper package as well as charging for a product that was previously included free. Increase newspaper price 5 and include free TV 6 magazine as a premium from outsourced vendor This is a high-risk business model, based on the assumption that the 86 to 95 percent of the average newspaper subscriber base that is not interested in a TV supplement will accept a rate increase based on the supplement. Recent attempts at this method have backfired, with large numbers of subscribers canceling the newspaper altogether and/ or calling to complain. Operational impact The operational impact of this model can be deceiving. Vendors say they provide turnkey solutions. However, newspapers that tried this method have experienced significant blowback from subscribers which impacts call centers and circulation departments that must work to win back these disgruntled customers. P&L Impact The potential upside to this business model is enticing to newspaper executives based on the spread between the cost of the supplement and the price increase passed on to subscribers. But the market reality has not matched the hype of this method. The potential risk is equally as high as some subscribers reject the price increase and cancel their newspaper subscriptions. Partnering with a TV magazine publisher such as TV Weekly magazine Partnering with a TV supplement publisher has many advantages, including significant reduction in operational impact, steady and predictable additional revenue, subscriber retention, and in the case of TV Weekly, keeping the cost of the supplement separate from the newspaper bill. Notably, TV Weekly also provides the niche audience with what they crave, a superior magazine as opposed to a TV tab. Operational impact The TV Weekly model reduces operational impact significantly, starting with editorial and production/printing. In addition, NTVB Media operates its own call centers, handles billing, and provides advertising and marketing materials to its partners. Partnering with NTVB and its TV Weekly magazine reduces more operational overhead than any other option. P&L impact The impact of an outsourced TV supplement is positive and significant for several reasons: 1. reduces operational expenses; 2. creates a new revenue stream based on deliveries to a right-sized niche audience; 3. maintains circulation and keeps subscribers happy by satisfying the demand for the product.

12 Conclusion Both the television and newspaper industries are being affected by disruptive technologies and changing demographics. It is considered to be the early days in the revolution of TV with new changes occurring almost daily. Consequently, technology supporting the changes has not matured to a point where it is simple and universally accepted. The situation has resulted in frustration for some in the marketplace who yearn for simpler and more familiar solutions to finding and planning their television viewing. Research shows a growing segment of the population that is highly interested in television and in print publications. At the same time, newspapers are more focused on retaining and growing circulation by offering products to niche markets. The combination of all of these factors has resulted in renewed interest in newspapers providing television supplements to their subscribers. This paper provides insight into the market for television supplements provided by newspapers, and various business models used by newspapers to satisfy their subscribers.

13 About NTVB NTVB Media is the leading publisher of high-quality television and entertainment magazines for newspapers, cable and satellite providers, and to consumers. The company publishes TV Weekly, ReMIND, TV Guide, Channel Guide, ONDISH, and VIEW! magazines. NTVB s unique business models and turnkey operations have allowed the company to forge strong relationships with more than 180 media partners. IDEAS THAT WORK